PARIS, Dec 27 (Reuters) - Strength in commodities boosted European benchmarks though tech stocks fell on Wednesday as the region emerged from a two-day trading holiday and investors reacted to reports demand for Apple’s new iPhone X was weaker than expected.

Euro zone blue-chips traded 0.4 percent higher but the index was still slightly down on the month, set for its second straight month of losses.

Commodities helped cement gains across the major benchmarks. Mining stocks rose after metals prices hit 3 1/2 year highs thanks to a strong outlook for growth from China. [nL4N1OR20H

Oil majors also contributed to gains as crude prices stayed strong.

But a tumble in chipmakers capped benchmark gains. Austria Microsystems, the best-performing European tech stock this year, sank 12 percent while Dialog Semiconductor dropped 3.5 percent, the biggest falls on the STOXX.

Tech was Europe’s worst-performing sector as the market followed a downturn in Asian iPhone suppliers after reports that demand for the new iPhone X has so far been weaker than expected. nL4N1OQ37C]

Chipmakers Infineon and STMicro fell 1 and 1.5 percent to the bottom of the German and French benchmarks. Silicon wafer maker Siltronic also features among top European fallers.

German carmakers BMW and Daimler gained 0.7 to 0.9 percent, rising to the top of Germany’s DAX. Both firms said late on Friday that the U.S. tax reform would boost 2017 profits to the tune of 1.55 billion and 1.7 billion euros respectively.

Merger activity continued to spur big stock moves with British workspace company IWG rocketing up 24 percent after it confirmed a bid approach from Canadian private equity firm Onex and Brookfield Asset Management. (Reporting by Helen Reid; Editing by Matthew Mpoke Bigg)